In a continuation of an ongoing battle, seven environmental groups (Cahaba Riverkeeper, Choctawatchee Riverkeeper, Friends of Hurricane Creek, Black Warrior Riverkeeper, Friends of the Locust Fork River, Alabama Rivers Alliance and the Sierra Club Alabama Chapter) recently filed an appeal to the 11th Circuit seeking to have it review the January 17, 2017, Agency Order issued by the United States Environmental Protection Agency (EPA). The January 17 Agency Order was the EPA’s Final Response to Three Petitions to Withdraw Alabama’s Authorization to Implement the Clean Water Act (CWA) National Pollutant Discharge System (NPDES) Program.

Under the CWA, discharges of pollutants into the nation’s waters are generally regulated under the NPDES program. The CWA gave EPA the authority to issue and enforce NPDES permits. States may apply to EPA for authorization to administer the NPDES program. In 1979, EPA approved the application of the Alabama Department of Environmental Management (ADEM) to administer the NPDES program in Alabama. ADEM currently continues to administer the NPDES program. EPA does have the authority to withdraw the NPDES program administration when a state program fails to comply with the CWA and its regulations, and when a state fails to take corrective actions.

Starting in 2001, and continuing with supplemental and new petitions through 2015, various environmental groups have petitioned EPA to withdraw ADEM’s authority over the NPDES program. EPA consolidated all of the various petitions and supplements and elected to address them all at one time. In 2014, EPA had issued an Interim Response to the petitions and supplements that had been filed through that time. In its Interim Response, EPA generally concluded that the petitions did not warrant withdrawal of ADEM authority; however, EPA did raise some significant concerns with ADEM, but elected at that time to give ADEM an opportunity to address those concerns prior to any final decision.

In the Final Response, EPA affirmed those issues that had been determined in the Interim Response and proceeded to consider the deferred issues of “General Adequacy of Penalty Assessments,” and “Insufficiency of Resources to Implement NPDES Program.” EPA determined that neither of those issues rose to the level to warrant initiation of withdrawal proceedings.

With regard to the Adequacy of Penalty Assessments, EPA began by noting the importance of penalties in deterring violations and incentivizing compliance. EPA noted that it had reviewed ADEM penalty actions and also evaluated processes that ADEM uses for assessing penalties. In its review, EPA found that ADEM was improving its overall procedures for assessing penalties; however, it did note that ADEM needs to improve its assessment of economic benefit in enforcement actions. In fact, EPA referenced two ways in which ADEM could do so: (1) by issuing any penalty only after the engineering of the injunctive relief portion of any enforcement action, or (2) by estimating the costs of the compliance measures.

With regard to the allegations relating to Insufficient Resources for ADEM to implement the NPDES program, EPA walked a fine line. EPA noted that ADEM’s budget had been significantly reduced, which caused it some concern. However, EPA noted that in spite of the lack of resources, ADEM has been able to implement an adequate NPDES program over the years. EPA settled on a finding that withdrawal of authority over the NPDES program due to inadequate funding was not warranted at this time, but left open the possibility of future action, noting that further cuts to ADEM’s budgets might well harm ADEM’s ability to administer the NPDES program itself.

What does this mean for you? As an initial matter, the critiques of ADEM within the Final Order may lead to a few changes in how ADEM handles the permitting process and how it handles future penalties. First, due to budgeting constraints and issues, you should expect to continue to see the costs charged by ADEM for permits and reviews and the like to continue to climb. This adds costs to any project. Second, with regard to penalties, one may well see an increase in penalty amounts in enforcement actions as ADEM looks to implement the costs of compliance within its penalty procedures.

The appeal to the 11th Circuit may lead ultimately to a withdrawal action. This would mean that ADEM would no longer have the authority to administer the NPDES program within Alabama, and that EPA would instead administer that program — change which could certainly affect construction and development in Alabama for years to come. Interested parties might seek to intervene in the petition to the 11th Circuit, or perhaps seek to file a friend-of-the-court petition to make its thoughts known on this issue.